Category: ComfortDelgro
ComfortDelgro – BT
ComfortDelGro Q2 profit edges up
TRANSPORT group ComfortDelGro Corporation registered a marginal 1.6 per cent increase in year-on-year net profit to $58.2 million for the second quarter ended June 30.
Revenue rose to $789.3 million, from $758.3 million a year earlier, amid growth across various business segments.
While actual revenue grew by $46.2 million, negative foreign currency translation as a result of the weaker British pound and Chinese yuan reduced this to $31 million. Group operating expenses came in at $690 million, up 3.9 per cent year on year.
Earnings per share climbed to 2.79 cents, from 2.74 cents per share in Q2 2009. For the first half, net profit was 2.5 per cent higher year-on-year at $112.5 million, while revenue was 5.5 per cent higher at $1.55 billion.
Revenue from the bus business rose 5 per cent to $399.8 million in the latest Q2, while revenue from the taxi business was 3.5 per cent higher at $238.7 million.
Revenue from the rail business at SBS Transit jumped 14.3 per cent to $30 million, as average daily ridership for the North East Line and the two LRT systems rose 14.4 per cent and 9.6 per cent respectively.
For Q2, revenue from overseas made up 43.1 per cent of total, versus 44.3 per cent a year back, as a result of the weaker British pound, though this was offset by a stronger Australian dollar. Outside Singapore, Comfort operates in six countries including China, the UK, Ireland and Australia.
On future outlook, Comfort said revenue from its Singapore bus business will be boosted by expected ridership growth, while revenue from its Australia bus operations will improve with increased services, but revenue from its UK bus business is expected to be affected by exchange rates.
Revenue from the rail business is also expected to benefit from ridership growth, while the taxi business in Singapore should register higher revenue with more cashless transactions and new taxis.
‘As global economic conditions remain uncertain, the group will continue to focus on the demand patterns of its customers, control expenses even though fuel and electricity costs will continue to pose challenges, and remain vigilant while seeking opportunities for growth,’ Comfort said.
At June 30, the group had cash and short-term deposits of $508.6 million and liquid investments of $35.1 million, for a total of $543.7 million. After offsetting borrowings of $580.8 million, it had a net debt position of $37.1 million and a net gearing ratio of 1.6 per cent.
Comfort has declared an interim dividend of 2.7 cents, to be paid on Sept 7.
Comfort’s shares closed one cent higher yesterday at $1.55.
ComfortDelgro – Phillip
Ridership update
• Bus ridership for June grew 4.8% y-y, YTD:2.4%
• Rail ridership continues to grow strongly in June, 9.8% y-y
• Purchase of Swan taxis Limited for A$38.8m (S$46.8m)
• Downgrade to Hold with a fair value estimate of S$1.73(unchanged)
2Q10 Results preview
We are forecasting revenue for 2Q10 to come in S$800.5m, operating profit of S$72.5m and net profit of S$46.4m. Operating expenses will likely remain high this year with the higher oil price and labour costs. CDG will be releasing their 2Q10 results on 13.08.10 after the market closes.
Both bus and rail ridership grew for the first 6 months
Bus ridership continues to grow modestly 4.8% y-y in June and 2.4% y-y for the first half of 2010. However we are likely to see some erosion of bus ridership from the opening of circle line which opened in July. We are forecasting bus ridership to grow 1% for the whole year to 838 million trips from 830 million trips. Rail ridership continues to impress in June growing 9.8% y-y, bringing year to date growth to 12.8%. Public transport are seeing better growth numbers this year mainly due to the sky high prices of COEs and increased connectivity of public transport.
Purchase of Swan taxis Limited for A$38.8m (S$46.8m)
Swan Taxis Limited, the largest provider of taxi services in the Perth metropolitan market with 1,667 taxis (91% market share). Based on the FY09 results, revenue was A$13.3m and profit before tax of A$4.6m which is about 0.5% of CDG’s total revenue (FY09). The purchase will strengthen its presence in Australia but contribution to its top and bottomline will be marginal.
Valuation and Recommendation
Since our Buy recommendation on 4th June 2010 (S$1.41), CDG has rose 12.1% to S$1.58. Based on our stock selection system, we are downgrading our buy recommendation to Hold and maintaining our fair value estimate of S$1.73. We believe that the UK’s taxi segment, which serves the corporate segment will likely pick up this year as most of the British banks are starting to turn profitable.
ComfortDelgro – Phillip
Ridership update
• Bus ridership for June grew 4.8% y-y, YTD:2.4%
• Rail ridership continues to grow strongly in June, 9.8% y-y
• Purchase of Swan taxis Limited for A$38.8m (S$46.8m)
• Downgrade to Hold with a fair value estimate of S$1.73(unchanged)
2Q10 Results preview
We are forecasting revenue for 2Q10 to come in S$800.5m, operating profit of S$72.5m and net profit of S$46.4m. Operating expenses will likely remain high this year with the higher oil price and labour costs. CDG will be releasing their 2Q10 results on 13.08.10 after the market closes.
Both bus and rail ridership grew for the first 6 months
Bus ridership continues to grow modestly 4.8% y-y in June and 2.4% y-y for the first half of 2010. However we are likely to see some erosion of bus ridership from the opening of circle line which opened in July. We are forecasting bus ridership to grow 1% for the whole year to 838 million trips from 830 million trips. Rail ridership continues to impress in June growing 9.8% y-y, bringing year to date growth to 12.8%. Public transport are seeing better growth numbers this year mainly due to the sky high prices of COEs and increased connectivity of public transport.
Purchase of Swan taxis Limited for A$38.8m (S$46.8m)
Swan Taxis Limited, the largest provider of taxi services in the Perth metropolitan market with 1,667 taxis (91% market share). Based on the FY09 results, revenue was A$13.3m and profit before tax of A$4.6m which is about 0.5% of CDG’s total revenue (FY09). The purchase will strengthen its presence in Australia but contribution to its top and bottomline will be marginal.
Valuation and Recommendation
Since our Buy recommendation on 4th June 2010 (S$1.41), CDG has rose 12.1% to S$1.58. Based on our stock selection system, we are downgrading our buy recommendation to Hold and maintaining our fair value estimate of S$1.73. We believe that the UK’s taxi segment, which serves the corporate segment will likely pick up this year as most of the British banks are starting to turn profitable.
ComfortDelgro – Kim Eng
Taking a Swan dive Down Under
What’s New
• ComfortDelgro is bidding to enter the Australian taxi market via an A$38.8m acquisition of Swan Taxis, the largest taxi operator in Perth, Western Australia. Priced at 13x earnings vs ComfortDelgro’s 14‐15x, this sounds like a good move in our view as it will be buying into a profitable company with a long operating history. It is also a natural extension of its bus businesses in Sydney and Melbourne. Maintain BUY with target price at $1.87 pending the completion of the deal.
Our View
• Swan Taxis is highly profitable with an EBIT margin that exceeds 30%, compared to ComfortDelgro’s 11‐12%. It is also practically zero debt and is in a strong net cash position. ComfortDelgro’s offer values Swan at earnings‐accretive levels.
• Growth prospects for Swan are excellent, in our view, as the population of Perth is expected to hit 2.2m by 2025, from 1.7m now. In fact, Perth’s population growth of 3.2% last year, driven by foreign immigration and interstate migration, made it the fastest‐growing city in Australia. The demand for taxi services is thus expected to
intensify.
• If the acquisition succeeds, we expect ComfortDelgro’s FY11F‐12F earnings would improve by 1.5‐2% and our fair value would increase from $1.87 currently to $1.90. The deal is likely to take three months to complete, subject to approval by the Australian Competition and Consumer Commission. Pending its completion, we are maintaining our forecasts for now.
Action & Recommendation
Pending the completion of the acquisition, we maintain our forecasts and target price of $1.87, based on 17x FY10 forecast. Maintain BUY.
ComfortDelgro – BT
ComfortDelGro makes play for SwanTaxis
A$38.8m cash takeover bid launched for Aussie firm, which has 9% share of the Perth metropolitan market
COMFORTDELGRO Corporation has launched an A$38.8 million (S$46.5 million) cash takeover bid for Australia’s Swan Taxis, which has a 91 per cent share of the Perth metropolitan market.
The offer for all the shares and options in Swan Taxis is conditional on ComfortDelGro obtaining at least 90 per cent of the company’s stock.
There are 225,545 Swan Taxis shares and options currently outstanding.
The offer price is about 1.4 times Swan Taxis’ book value and 6.6 times its Ebitda (earnings before interest, tax, depreciation and amortisation).
‘Swan is the leading taxi operator in Western Australia with an advanced despatch system and a strong customer base,’ said Kua Hong Pak, ComfortDelGro’s managing director and group chief executive.
‘We are excited about the prospects this proposed acquisition offers us – geographic expansion and extension of another of our core businesses in Australia.’
The acquisition, which will be funded internally, is not expected to have a material impact on the group’s net tangible assets per share or earnings per share for its financial year ending Dec 31, 2010.
ComfortDelGro said yesterday it has lodged a bidder’s statement with the Australian Securities & Investments Commission for Swan Taxis’ shares and options.
An offer letter will be sent to Swan Taxis shareholders within two weeks, and they will have seven weeks to decide.
If and when a 90 per cent acceptance rate is achieved, ComfortDelGro will compulsorily acquire all shares.
Swan Taxis, which has a fleet of 1,667 taxis, is an unlisted public company.
For the 12 months ended June 30, 2009, it reported revenue of A$13.3 million and a profit before tax of A$4.6 million.
ComfortDelGro is already one of the largest private bus operators in the Australian states of New South Wales and Victoria.
Australia accounts for the lion’s share of ComfortDelGro’s overseas investment, at $357 million to date.
Overseas ventures currently account for 42.9 per cent of ComfortDelGro’s group revenue – a figure it plans to grow to 70 per cent over the medium term.
The group’s counter closed one cent higher at $1.51 in trading yesterday.